CBSE Class 12 Accountancy Admission Of A Partner MCQs Set E

Question. Goodwill is nothing more than probability that the old customer will resort to the old place. This definition of goodwill was given by:
(a) Spicer and Pegler
(b) ICAI
(c) Lord Elton
(d) AICPA
Answer: (c)

Question. Goodwill is to be calculated at one and half year’ purchase of average profit of last \( 5 \) years. The firm earned profits during \( 3 \) years as \( Rs 20,000 \), \( Rs 18,000 \) and \( Rs 9,000 \) and suffered losses of \( Rs 2,000 \) and \( Rs 5,000 \) in last \( 2 \) years. The amount of goodwill will be :
(a) \( Rs 12,000 \)
(b) \( Rs 10,000 \)
(c) \( Rs 15,000 \)
(d) None of these
Answer: (a)

Question. When there is no Goodwill Account in the books and goodwill is raised,…………….account will be debited :
(a) Partner’s Capital
(b) Goodwill
(c) Cash
(d) Reserve
Answer: (b)

Question. The amount of goodwill is paid by new partner :
(a) for the payment of capital
(b) for sharing the profit
(c) for purchase of assets
(d) None of these
Answer: (b)

Question. At the time of admission of a new partners general reserve appearing in the old Balance Sheet is transferred to:
(a) All Partner’s Capital Accounts
(b) New Partner’s Capital Account
(c) Old Partners’. Capital Accounts
(d) None of these
Answer: (c)

Question. Profit or Loss on Revaluation is borne by:
(a) Old Partners
(b) New Partners
(c) All Partners
(d) Only Two Partners
Answer: (a)

Question. Share of goodwill brought by new partner in case is shared by old partners in :
(a) Sacrificing Ratio
(b) Old Ratio
(c) New Ratio
(d) Equal Ratio
Answer: (a)

Question. A, B and C are three partners sharing profits and losses in the ratio of \( 4:3:2 \). D is admitted for \( 1/10 \) share, the new ratio will be :
(a) \( 10:7:7:4 \)
(b) \( 5:3:2:1 \)
(c) \( 4:3:2:1 \)
(d) None of these
Answer: (c)

Question. A and B are partners in a firm sharing profits in the ratio of \( 3:2 \). They admit C as a new partner for \( 1/3rd \) share in the profits of the firm. The new profit sharing ratio of A, B and C would be :
(a) \( 3:2:1 \)
(b) \( 3:2:2 \)
(c) \( 3:2:3 \)
(d) \( 6:4:5 \)
Answer: (d)

Question. X and Y are partners sharing profits in the ratio of \( 1:1 \). They admit Z for \( 1/5th \) share who contributed \( Rs 25,000 \) for his share of goodwill. The total value of goodwill of the firm will be :
(a) \( Rs 2,50,000 \)
(b) \( Rs 50,000 \)
(c) \( Rs 1,00,000 \)
(d) \( Rs 1,25,000 \)
Answer: (c)

Question. A, B and C are partners in a firm. If D is admitted as a new partner, then:
(a) Old firm is dissolved
(b) Old firm and old partnership is dissolved
(c) Old Partnership is reconstituted
(d) None of these
Answer: (c)

Question. In which ratio, the cash brought in for goodwill by the new partner is shared by the existing partners :
(a) Profit sharing ratio
(b) Capital ratio
(c) Sacrificing ratio
(d) None of these
Answer: (c)

Question. Sacrificing ratio is ascertained at the time of:
(a) Death of a partner
(b) Retirement of a partner
(c) Admission of a partner
(d) None of these
Answer: (c)

Question. If at the time of admission of new partner, Profit and Loss Account balance appears in the books, it will the transferred to:
(a) Profit & Loss Appropriation A/c
(b) All Partners’ Capital A/cs
(c) Old Partners’ Capital A/cs
(d) Revaluation A/c
Answer: (c)

Question. State the ‘true’ statement:
(a) Profit & Loss Adjustment A/c is prepared for revaluated of assets and liabilities on the admission of a partner
(b) The new partner is liable for the past losses of the firm
(c) In case the new partner is unable to bring in cash for goodwill, Goodwill Account may be raised in the firm’s books as per AS-26
(d) When a partner is admitted, there is dissolution of firm
Answer: (a)

Question. Excess of the credit side over the debit side of Revaluation account is:
(a) Profit
(b) Loss
(c) Gain
(d) Expense
Answer: (a)

Question. Balance sheet prepared after new partnership agreement, assets and liabilities are recorded at:
(a) Original Value
(b) Revalued Figure
(c) At Realisable Value
(d) Either of (a) or (b)
Answer: (b)

Question. Assets and Liabilities are shown at their revalued values in:
(a) New Balance Sheet
(b) Revaluation A/c
(c) All Partner’s Capital A/c’s
(d) Realisation A/c
Answer: (a)

Question. Which of the following assets is compulsorily revalued at the time of admission of a new partner :
(a) stock
(b) Fixed Assets
(c) Investment
(d) Goodwill
Answer: (d)

Question. A and B are partners. C is admitted with \( 1/5 \) share. C brings \( Rs 1,20,000 \) as his share towards capital. The total net worth of the firm is :
(a) \( Rs 1,00,000 \)
(b) \( Rs 4,00,000 \)
(c) \( Rs 1,20,000 \)
(d) \( Rs 6,00,000 \)
Answer: (d)

Question. A and B share profits and losses in the ratio of \( 3:4 \). C was admitted for \( 1/5th \) share. New profit sharing ratio will be:
(a) \( 3:4:1 \)
(b) \( 12:16:7 \)
(c) \( 16:12:7 \)
(d) None of these
Answer: (b)

Question. The opening balance of Partner’s Capital Account is credited with:
(a) Interest on Capital
(b) Interest on Drawings
(c) Drawings
(d) Share in loss
Answer: (a)

Question. Share of goodwill brought in cash by the new partner is called:
(a) Assets
(b) Profit
(c) Premium
(d) None of these
Answer: (c)

Question. If the incoming partner brings the amount of goodwill in cash and also a balance exists in Goodwill A/c, then the Goodwill A/c is written off among the old partners:
(a) In new profit-sharing ratio
(b) In old profit-sharing ratio
(c) In sacrificing ratio
(d) In gaining ratio
Answer: (b)

Question. A and B share profits and losses in the ratio of \( 3:1 \). C is admitted into partnership for \( 1/4 \) share. The sacrificing ratio of A and B is :
(a) Equal
(b) \( 3:1 \)
(c) \( 2:1 \)
(d) \( 3:2 \)
Answer: (b)

Question. A and B are partners sharing profits in the ratio of \( 3:1 \). They admit C for \( 1/4 \) share in future profits. The new profit sharing ratio will be:
(a) \( A \frac{9}{16}, B \frac{3}{16}, C \frac{4}{16} \)
(b) \( A \frac{8}{16}, B \frac{4}{16}, C \frac{4}{16} \)
(c) \( A \frac{10}{10}, B \frac{2}{16}, C \frac{4}{16} \)
(d) \( A \frac{8}{16}, B \frac{9}{16}, C \frac{10}{16} \)
Answer: (a)

Question. Formula of Sacrificing ratio is:
(a) New Ratio – Old Ratio
(b) Old Ratio – New Ratio
(c) Gain Ratio – Sacrificing Ratio
(d) New Ratio – Sacrificing Ratio.
Answer: (b)

Question. The accumulated profits and reserves are transferred to:
(a) Realisation A/c
(b) Partner’s Capital A/cs
(c) Bank A/c
(d) Savings A/c
Answer: (b)

Question. A, B and C are equal partners. D is admitted to the firm for one-fourth share. D brings \( Rs 20,000 \) as capital and \( Rs 5,000 \) being half of the premium for goodwill. The value of goodwill of the firm is:
(a) \( Rs 10,000 \)
(b) \( Rs 40,000 \)
(c) \( Rs 30,000 \)
(d) None of these
Answer: (b)

Question. On the admission of a new partner, increase in the value of assets is debited to which account?
(a) Revaluation Account
(b) Assets Account
(c) Old Partners’ Capital Accounts
(d) None of these
Answer: (b)

Question. Z is admitted in a firm for a \( 1/4 \) share in the profit for which he brings \( Rs 30,000 \) for goodwill. It will be taken away by the old partners X and Y in :
(a) Old profit-sharing ratio
(b) New profit-sharing ratio
(c) Sacrificing ratio
(d) Capital ratio
Answer: (c)

Question. On the admission of a new partner, the decrease in the value of assets is debited to:
(a) Revaluation Account
(b) Assets Account
(c) Old Partners’ Capital Accounts
(d) None of these
Answer: (a)

Question. When the new partner pays for goodwill in cash, the amount should be debited in the firm’s book to:
(a) Goodwill Account
(b) Cash Account
(c) Capital Account of new partner
(d) None of these
Answer: (b)

Question. The balance of Revaluation Account or Profit & Loss Adjustment Account is transferred to Old Partners’ Capital Accounts in their :
(a) Old profit-sharing ratio
(b) New profit-sharing ratio
(c) Equal ratio
(d) Capital ratio
Answer: (a)

Question. X and Y share profits in the ratio of \( 3:2 \) Z was admitted as a partner who gets \( 1/5 \) share. Z acquires \( 3/20 \) from X and \( 1/20 \) from Y. The new profit sharing ratio will be :
(a) \( 9:7:4 \)
(b) \( 8:8:4 \)
(c) \( 6:10:4 \)
(d) \( 10:6:4 \)
Answer: (a)

Question. The opening balance of Partner’s Capital Account is credited with:
(a) Interest on Capital
(b) Interest on Drawings
(c) Drawings
(d) Share in loss
Answer: (a)

Question. At the time of admission of a new partner, Undistributed Profits appearing in the Balance Sheet of the old firm is transferred to the Capital Account of:
(a) Old partners in old profit-sharing ratio
(b) Old partners in new profit-sharing ratio
(c) All the partners in the new profit-sharing ratio
(d) None of these
Answer: (a)

Question. Z is admitted in a firm for a \( 1/4 \) share in the profit for which he brings \( Rs 30,000 \) for goodwill. It will be taken away by the old partners X and Y in :
(a) Old profit-sharing ratio
(b) New profit-sharing ratio
(c) Sacrificing ratio
(d) Capital ratio
Answer: (c)

Question. General Reserve at the time of admission of a new partner is transferred to:
(a) Revaluation Account
(b) Old Partner’s Capital Account
(c) Profit and Loss Adjustment Account
(d) Realisation Account
Answer: (b)

Question. Change in profit-sharing ratio of existing partners results in:
(a) Revaluation of Firm
(b) Reconstitutions of Firm
(c) Dissolution of Firm
(d) None of these
Answer: (b)

Question. X, Y and Z are partners in a firm, they divided profit and loss in the ratio of \( 4:3:1 \). They decided to share profit in the ratio \( 5:4:3 \). X’s and Y’s sacrifices are :
(a) \( \frac{2}{24} : \frac{1}{24} \)
(b) \( \frac{1}{24} : \frac{3}{24} \)
(c) \( \frac{2}{24} : \frac{3}{24} \)
(d) None of these
Answer: (a)

Question. On reconstitution of a partnership firm, recording of an unrecorded liability wil result in:
(a) Gain to the existing partners
(b) Loss to the existing partners
(c) Neither gain nor loss to the existing partners
(d) None of these
Answer: (b)

Question. Increase in the value of assets on reconstitution of the partnership firm results into:
(a) Gain to the existing partners
(b) Loss to the existing partners
(c) Neither gain nor loss to the existing partners
(d) None of these
Answer: (a)

Question. The balance of Revaluation Account is transferred to old Partner’s Capital Accounts in their:
(a) Old Profit-sharing Ratio
(b) New Profit-sharing Ratio
(c) Equal Ratio
(d) None of these
Answer: (a)

Question. X and Y share profits in the ratio \( 2:3 \). In future they have decided to share profits in equal ratio. Which partner will sacrifice in which ratio?
(a) X sacrifice \( 1/10 \)
(b) Y sacrifice \( 1/5 \)
(c) Y sacrifice \( 1/10 \)
(d) None of these
Answer: (c)

Question. Change in the partnership agreement results in:
(a) Reconstitution of Firm
(b) Dissolution of Firm
(c) Amalgamation of Firm
(d) None of these
Answer: (a)

Question. Change in the partnership agreement:
(a) Changes the relationship among the partners
(b) Results in end of partnership business
(c) Dissolves the partnership firm
(d) None of these
Answer: (a)

Question. Excess of credit side over the debit side in Revaluation Account is:
(a) Profit
(b) Loss
(c) Receipt
(d) Expense
Answer: (a)

Question. A, B and C are partners in a firm, if D is admitted as a new partner:
(a) Old firm is dissolved
(b) Old firm and old partnership are dissolved
(c) Old partnership is reconstituted
(d) None of these
Answer: (c)

Question. Recording of an unrecorded asset on the reconstitution of a partnership firm will be:
(a) A gain to the existing partners
(b) A loss to the existing partners
(c) Neither a gain nor a loss to the existing partners
(d) None of these
Answer: (a)

Question. Revaluation Account or Profit & Loss Adjustment Account is a:
(a) Personal Account
(b) Real Account
(c) Nominal Account
(d) None of these
Answer: (c)

Question. A, B, C and D are partners sharing their profits and losses equally. They change their profit sharing ratio to \( 2:2:1:1 \). How much will C sacrifice?
(a) \( 1/6 \)
(b) \( 1/12 \)
(c) \( 1/24 \)
(d) None of these
Answer: (d)

Question. Sacrificing Ratio:
(a) New Ratio – Old Ratio
(b) Old Ratio – New Ratio
(c) Gaining Ratio – Old Ratio
(d) Old Ratio – Gaining Ratio
Answer: (b)

Question. Gaining Ratio:
(a) New Ratio – Old Ratio
(b) Old Ratio – Sacrificing Ratio
(c) New Ratio – Sacrificing Ratio
(d) Old Ratio – New Ratio
Answer: (a)

Question. X and Y share profit and loss in \( 3:2 \). From 1st January, 2017 they agreed to share profit equally. Their sacrifice or gain will be:
(a) Sacrifice by X: \( 1/10 \)
(b) Sacrifice by Y: \( 1/10 \)
(c) Both (a) and (b)
(d) None of these
Answer: (c)

Question. At the time of admission of a new partner, General Reserve aappearing in the old Balance Sheet is transferred to:
(a) All Partner’s Capital Accounts.
(b) New Partners’ Capital Accounts
(c) Old Partner’s Capital Accounts
(d) None of these
Answer: (c)

Question. Change in profit-sharing ratio of existing partners results in:
(a) Revaluation of Firm
(b) Reconstitution of Firm
(c) Dissolution of Firm
(d) None of these
Answer: (b)

Question. Generally the interest on capital is considered as :
(a) An appropriation of profit
(b) An Asset
(c) An Expense
(d) None of these
Answer: (a)

Question. Increase in the value of assets on reconstitution of the partnership firm results into:
(a) Gain to the existing partners
(b) Loss to the existing partners
(c) Neither a gain nor a loss to the existing partners
(d) None of these
Answer: (a)

Question. Following are the factors affecting goodwill except:
(a) Nature of business
(b) Efficiency of Management
(c) Technical Knowledge
(d) Location of the Customers
Answer: (c)

Question. The profit of the last three years are \( Rs 42,000 \), \( Rs 39,000 \) and \( Rs 45,000 \). Value of goodwill at two years purchases of the average profits will be :
(a) \( Rs 42,000 \)
(b) \( Rs 84,000 \)
(c) \( Rs 1,26,000 \)
(d) \( Rs 36,000 \)
Answer: (b)

Question. Under average profit basis goodwill is calculated by :
(a) No. of years’ purchased x Average profit
(b) No. of years’ purchased x Super profit
(c) Super Profit - r Expected Rate of Return
(d) None of these
Answer: (a)

Question. Goodwill is:
(a) Tangible Asset
(b) Intangible Asset
(c) Current Asset
(d) None of these
Answer: (b)

Question. An asset which is not fictitious but intangible in nature, having realisable value is :
(a) Machinery
(b) Building
(c) Furniture
(d) Goodwill
Answer: (d)

Question. Which of the following is not a method of valuation of Goodwill:
(a) Revaluation Method
(b) Average Profit Method
(c) Super Profit Method
(d) Capitalisation Method
Answer: (a)

Question. The excess of average profits over the normal profits are called :
(a) Super Profits
(b) Fixed Profits
(c) Abnormal Profits
(d) Normal Profits
Answer: (a)

Question. Goodwill is a…………….asset
(a) Useless
(b) Tangible
(c) Worthless
(d) Valuable
Answer: (c)

Question. Under super profit basis goodwill is calculated by :
(a) No. of years’ purchased x Average Profit
(b) No. of years’ purchased x Super profit
(c) Super profit - r Expected rate of return
(d) None of these
Answer: (b)

Question. Profits of the last three years were \( Rs 6,000 \), \( Rs 13,000 \) and \( Rs 8,000 \) respectively. Goodwill at two years purchase of the average net profit will be :
(a) \( Rs 81,000 \)
(b) \( Rs 27,000 \)
(c) \( Rs 9,000 \)
(d) \( Rs 18,000 \)
Answer: (d)

Question. What do you mean by Super Profit?
(a) Total Profit/No. of Years
(b) Average Profit – Normal Profit
(c) Weighted Profit/No. of Years’ Purchase
(d) None of these
Answer: (b)

Question. Capital employed in a business is \( Rs 1,50,000 \). Profits are \( Rs 50,000 \) and the normal rate of profit is \( 20\% \). The amount of goodwill as per capitalisation method will be:
(a) \( Rs 2,00,000 \)
(b) \( Rs 1,50,000 \)
(c) \( Rs 3,00,000 \)
(d) \( Rs 1,00,000 \)
Answer: (d)

Question. Weighted average method of calculating goodwill is used when:
(a) Profits are equal
(b) Profit has increasing trend
(c) Profit has decreasing trend
(d) Either (b) or (c)
Answer: (d)

Question. The monetary value of reputation of the business is called:
(a) Goodwill
(b) Super Profit
(c) Surplus
(d) Abnormal Profit
Answer: (a)

Question. A firm has an average profit of \( Rs 60,000 \) Rate of return on capital employed is \( 12.5\% \) p.a. Total capital employed in the firm was \( Rs 4,00,000 \). Goodwill on the basis of two years purchase of super profit is:
(a) \( Rs 20,000 \)
(b) \( Rs 15,000 \)
(c) \( Rs 10,000 \)
(d) None of these
Answer: (a)

Question. Under capitalisation method, goodwill is calculated by :
(a) Average Profit x No. of Years’ Purchase
(b) Super Profit x No. of Years’ Purchase
(c) Total of the discounted value of expected future benefits
(d) Super Profit \(\div\) Expected Rate of Return
Answer: (d)

Question. “Goodwill is nothing more than probability that the old customer will resort to the old place.” This definition of goodwill was given by :
(a) Spicer and Pegler
(b) ICAI
(c) Lord Elton
(d) AICPA
Answer: (c)

Question. What will be the value of goodwill at twice the average of last three years profit if the profits of the last three years were \( Rs 4,000 \), \( Rs 5,000 \) and \( Rs 6,000 \)?
(a) \( Rs 5,000 \)
(b) \( Rs 10,000 \)
(c) \( Rs 8,000 \)
(d) None of these
Answer: (b)

Question. The Valuation of Goodwill is not necessary in Sole Trading:
(a) On selling the Firm
(b) On making a partner
(c) On estimation of Assets
(d) On Closing the Firm
Answer: (d)